Wheat prices
plunged to a four-year low, with corn
and soybean futures showing significant
losses too, as weather forecasts continued to prove "ideal", reducing the call
for risk premium to support values.

Wheat for July settled down 4.1% at $5.45 a bushel in Chicago
at one point, the lowest for a spot contract since July 2010.

The better-traded September wheat contract ended down 3.9%
at a contract closing low of $5.56 ¾ a bushel.

The declines reflected decreasing concerns for the US
harvest, with drier weather seen allowing a pick-up in harvest progress besides
lowering concerns over rain damage to ripe crops.

'Fields drying up'

"A weather forecaster we use described the outlook in one
word - 'ideal'," said Sterling Smith at Citigroup, highlighting also the
prospect of continued cool conditions supportive for corn pollination.

For wheat "the weather for the next 5-10 days looks like
allowing farmers to make good progress on the harvest", he said.

Indeed, World Weather said that in the southern US Plains,
where the early wheat harvest suffered particular rains delays, "will see little
to no rain over the next week, and some areas may go 10 days to two weeks
without much rain".

Industry group Kansas Wheat said that "fields across Kansas",
the top US wheat producing state, "continue to dry up as farmers state-wide are
scrambling to finish harvesting their wheat.

"Yields have continued to be lower than average, but have
remained above expectations for the year's harvest."

And while the "quality of the wheat has dropped slightly due
to the influx of rainfall, [it] still remains good overall".

'Harvest pressure hurting
wheat'

At broker Country Futures, Darrell Holaday said that "harvest
pressure is hurting wheat values as the harvest moves north and wheat yields
improving every mile it moves north.

"Also, Russian winter wheat yields have started to come in
and they are better than expected. All factors are pressuring world wheat
values."

Actually, there are now some concerns over damage from
harvest-time rains to some European Union crops.

And an estimate by the Deutscher Bauernverband farmers'
group of the German winter wheat crop, at "almost" 25m tonnes, was a touch
lower than other recent forecasts, and highlighted some setback from drought
earlier in the growing season.

Less dismal performers

Furthermore, there was some sign of demand too, with Turkey
tendering for 235,000 tonnes of wheat, and 200,000 tonnes of barley, and Jordan
tendering for 100,000 tonnes of wheat.

US wheat exports, as measured by cargo inspections, rose to
417,063 tonnes last week, from 335,389 tonnes the week before.

And, from a technical perspective, Australia & New
Zealand Bank offered some hope to bulls from the extent of the drop in hedge
funds' net long position in ags, and increased net short position in wheat, proposing
that this questioned the extent of further pressure on prices from this source.

Still prices dropped, if less so for Kansas City hard red
winter wheat, which ended down 2.4% at $6.70 ½ a bushel for September delivery,
a four-month closing low.

Paris wheat fared relatively well, offered some support by
the wetness concerns for the European Union harvest, with the November lot shedding
1.1% to E182.50 a tonne, although this was still the lowest close for a spot
contract in nigh on 11 months.

London wheat for November ended down 1.0% at a contract
closing low of £133.20 a tonne.

'Conditions are just
too good'

Back in Chicago, corn
performed a little less dismally than wheat, but only just, ending down 2.2% for
December delivery at a contract closing low of $4.06 ¼ a bushel.

"The reality is that conditions are just too good coming out
of the July 4 holiday and the forecast is very favourable for the next 10 days,"
Country Futures' Darrell Holaday said.

"This reality has really hammered corn values."

US corn is beginning to enter in earnest the pollination
process, which is heat sensitive, with hot weather and droughts such as that in
2012 sending yields tumbling.

Yield hopes

But, in fact, the temperatures forecast for the Midwest "has
trended cooler today, with generally below normal temperatures expected over
the Corn Belt for the next 10 days", MDA said.

"This cool outlook will limit the potential for heat stress
and should be favourable for the crop," the weather service said, adding that
there should be a few showers to keep soil moisture refreshed too.

Broker US Commodities said that "the current crop conditions
report suggests that yields are likely to be above trend line.

"The 30 years of US and state yields from 1984 through 2013
suggest a US corn yield in the low-to-mid 170s bushels per acre, and US soybean yield in the 47-48 bushels per
acre range are attainable with good weather throughout the growing season over
most of the US."

Old crop September corn ended down 2.2% at $4.00 ½ a bushel,
falling to $3.97 a bushel earlier – falling below $4.00 a bushel for the first
time for a nearest-but-one contract for the first time since August 2010.

US exports last week were in fact decent, at 1.08m tonnes,
up from 886,949 tonnes the week before.

Old vs new

Soybeans themselves fell 0.7% to $11.25 ½ a bushel for the
new crop November contract, a relatively creditable performance, and
potentially supporting ANZ's ideas of more limited selling pressure ahead in the
oilseed for now.

In fact, the relative outperformance of the November
contract likely reflects the unwinding of long old crop-short soybean spreads,
with the old crop August lot down 2.0% at $12.73 ¼ a bushel.

"We are seeing… major liquidation in the old crop soybean
futures," Mr Holaday said.

"This has supported the November soybean contract. But in
the end this liquidation of the old crop/new crop spreads is very negative for
the complex and will be negative to November soybeans."

US soybean exports last week came in at 59,959 tonnes, down
from 74,324 tonnes the week before, but taking the total for the season to
42.66m tonnes, nearly at the total of 44.34m tonnes the US Department of Agriculture
has forecast for 2013-14 with two months to go.

'Needed rain'

The selling spread to cotton
too, an alternative to corn and soybeans in many US farmers' spring sowings
programmes, which tumbled 2.6% to 70.21 cents a pound in New York for December
delivery, a fresh two-year closing low.